Finnair on airline modern retailing transition and how it will benefit the traveler experience

In December 2022, Finnair started its journey towards modern retailing by adopting Amadeus Nevio. 

In this episode we are taking stock of the progress made by Finnair, the achievements, the challenges and the key benefits Finnair is now able to offer to its travelers. 

As part of the Travel Technology Investment Trends 2024 research, we surveyed airline executives across the world about their investment strategy for the coming year. They told us that they were planning to increase their investment in technology by an average of 13% year-over-year. 

With all the industry initiatives around Offer and Order and NDC, we can feel we are right now at a turning point. 

What can we expect in this next exciting chapter of our industry? Tune in to find out with our speakers: 

• Pia Viljaniemi, Head of Commercial and Financial Applications at Finnair 
• Fabrizio Calcabrini, Executive Vice President, Airlines Solutions at Amadeus  

To stay up to date on the latest news from Amadeus, and to catch the next episodes in our series, check out the Resource section on our website or follow us on Spotify or Apple podcasts.

Transcript

0:14

[Music] Hello and welcome to this new episode of the Amadeus Travel Tech Talk Podcast,  podcast where we discuss the latest trends happening within the travel industry. My name is Bertrand Cognard and I'll be your host for today's episode. As part of the travel technology investment trend 2024 research, we conducted a survey which included airline executives across the world about their investment strategy for the coming year. They told us that they were planning to increase their investment in technology by an average of 13% year over year. With all the industry initiatives around offer and order and NDC, we can all feel that we are at the right moment and at the turning point for the travel industry. We are here today to talk about airline transition towards modern retailing and how it would ultimately benefit the traveler experience. I'm joined today by my first guest Pia Viljaniemi from Finnair. Hello Pia, thank you so much for being with us today. Can you let us know a bit more about your role at Finnair? Yes, hello Bertrand and thank you so much for inviting me to this podcast. So yes, so I'm Pia Viljaniemi and I'm working at Finnair in the digital services unit, so maybe more known as IT and I'm a head of commercial solutions. So it means mainly offer and order management systems and also heading our retailing program and taking care of the vendors management of Amadeus. Thank you so much Pia and my second guest will be my colleague from Amadeus Fabrizio Calcabrini. Hello Fabrizio, same question for you. Can you tell us a bit more about your role at Amadeus? Yes, hello Pia and hello Bertrand. So today I'm leading the Nevio program delivery organization. I'm a long-runner in the company. I've been around for more than 30 years in Amadeus with an engineering background but part of my assignments in the company have been in the commercial organization. Thank you so much. Thanks for being with us today. So just before we jump into the topic of airlines retailing, I would like first to discuss about Finnair and its culture of innovation. So very recently Finnair celebrated its 100th anniversary and despite being one of the oldest airlines operating right now, you keep on innovating and taking some very ambitious commitment to propel the industry forward. So Pia, why did Finnair have such a strong and forward-thinking  approach when it comes to innovation? Yes, you mentioned that we are 100 years old and we are old but still young at heart so we like to innovate and I would say that some of the reasons is that we are really actively following those technology trends and we have done many pilot projects with Amadeus. For example, we were one of the first airlines when  migrating to Altea. We also have a strong culture of innovation. We are having for example innovation sprints which are started. The topic is AI so interesting to see that what's the outcome of these  innovations. Also about the size of airline, I think that we are very like right sized. We are not too big, we are not too small so we can make the decisions very quickly and also adapt the changes and also about our people so they have like very wide responsibility areas. So I believe that it helps to understand the bigger picture and also help with these innovations and all these innovations they are important for our success and growth and we definitely want to be like one of the forerunners in this retail and transformation and to get those early mover advantages. Sure and I've noticed you mentioned innovation quite a few times in your answer and I would like now to move to this airlines retailing transformation we are all experiencing right now and Finnair was the first airline actually to adopt Nevio. Nevio is Amadeus Airlines modern retailing platform that we introduced recently and I would like to understand why Nevio was different from all the other solutions technologies that were already available on the market and why Finnair took that decision to move to Nevio. Yes we started the program one and a half years ago. Our main focus is customer centricity. So we want to offer personalized, smart, enjoyable customer experience. For that we need better retailing capabilities and we want to implement faster new products to our customers. What we also want that we will take want to control of our experience layers so more direct sales, more traffic on finnair.com and on ndc  and also we have published that we want to sunset the old technology and to move to modern and modern technology with open platform and modular architecture and we selected the vendor who can implement this through both offer and order management system and we selected Amadeus Nevio for that and we believe that you are able to do it for us. And actually I would like to get the opinion of Fabrizio on that. Why do you think the Nevio offer was appealing to Finnair at this time? I mentioned them a long run in the company and I was actually part of the team that built Altea 20 years ago and I think at that time the major difference Altea made was about leveraging the latest available technology. So Altea has been the first PSS in the industry built on open standards. Okay so somehow history is repeating. Nevio, I mean since the Altea implementation, 20 years have gone, have passed and technology has made giant steps and when you look at today, I mean Nevio is going to be a totally new technology solution built on the latest available technologies. It's going to be a cloud native solution. It's going to leverage data streaming and event-driven architecture and make a larger and extensive use of AI solutions. So those are all the, let's say, the new goodies that technology can make available. I want to take the point, the open and modular architecture that Pia mentioned, as this is a very important element of the design of Nevio. So Nevio is built with the approach to optimize and facilitate the integration of external partners, external solutions. So we have built an access layer with very powerful APIs that facilitate greatly, as an example, the development of UI-oriented applications. So for the touchpoint management, for the system-to-system integration, up to the point of exposing easy access to the data layer, which is very important, because at that level, airlines can really benefit from the real-time events and real-time latest images of data to drive informed decisions and to follow on the movements that come through the different touchpoints. So all in all, my pitch here is a new technology that will give the business agility to Finnair and to the future customers of Nevio. And this, in turn, will enable flexibility, autonomy, speed,  and facilitate the disintegration of external providers, partners, solutions that, at the end, will imply smoother operations for their lines and better service delivery to travelers. And that's great to understand more the context behind that decision and also the technological background behind that. But maybe we can get more understanding of what it means for the traveler experience, concretely. So Pia, the Finnair Retailing Transformations that started with Nevio is a multi-year program. We actually started at the end of 2022. What have been the key learning for Finnair so far on this program? Yes, I think about this production. So when we started, we had a quite long planning and scoping phase. And I feel that that was really important to clarify all our requirements, which we have listed in the RFP phase. So that was a really important one. Then I really like our way of working. So we have this agile way of working and also we have this step-by-step approach. So we are having early deliverables, which will then bring value, both for the customer and for Finnair. We have a very strong collaboration between the teams in Finnair, but also between Finnair and Amadeus. Also, I would say these key learnings are about business processes. So it requires a huge change. And even that we don't know yet what all these products are coming, but we really need to start thinking about how our business processes will change in the future. Maybe there are some roles which are not needed anymore and so on. So we need to work in parallel when also doing these implementations. But maybe last but not least also that we are not going to have PNRs anymore in the future. And that's a very big change. So in the future,  we have only these orders and maybe not any restrictions what we had in PNRs. So we can feel it's a very complex program. So maybe to hear from you, Fabrizio, as the lead on Nevio, just to understand more, how do we manage this kind of massive transformation for airlines while making sure they can still operate and achieve their individual objectives? What are the key things that airlines need to think of when they're undergoing a massive change like that? Okay. So I think, first of all, engaging with Nevio is a multi-year transformational program that requires the base and organization alignment. It requires investment and efforts to execute on this transformation. Okay. So that part is quite important and somehow shapes a little bit the way we are delivering the program. So Pia mentioned that there is no appetite here to invest over a longer transformation waiting for the return of investment at the end of the program. We have organized the program with short increments. So it's continuous deliveries and continuous integration. And the main message I want to share is that we have given the accountabilities of the plan to a number of business owners that are actually from PNR that actually give the tempo and the priorities to the teams. Okay. So while it is a major transformation on the technology side, I mean, we are doing this to achieve some clear business objectives and we have defined the clear ambitions for PNR and we have a value framework that somehow defines the program. And when it comes to the transformation, we know that this is going to be a very long journey where the PSS, so Altea for PNR and the Naview platform will coexist. So in order to optimize the transition path, we have defined the specific roles that focus precisely on optimizing the plan, taking the business angle of the business perspective, taking the technology perspective as well. There will be a period of dual system running. So this may imply double cost. So we have specific profiles looking at how to optimize that data. And last but not least, we look at optimizing the overall implementation plan across the years in a way that all comes to place. And the ROI, the cost and so on is all aligned to the expectations. So what I understand from this retailing transformation is that it requires a complete change of mind, having much more traveler-centric approach. So Pia as an airline, what does it mean in terms of how do you structure yourself and the sort of change that you have to  implement to create that new traveler-centric approach? Well, at first I would say that in this retailing program, it's important that you have C-level management support behind what you're doing. We have also defined the business accountabilities and value areas. Then we have cross-functional teams. So strongly business and IT are working together. At the moment, we don't have any dedicated team. So it means that also all the people have also their other duties as well. But we have a very good mix of people. So those ones with the long experience and also the new ones with the new fresh ideas. And everybody is very excited for this program and also very committed to it. We are working actively on daily basis with Amadeus. Amadeus team is also very experienced and very good. We are happy to work with them. And I really like this. That's our way of working. That's very interesting. And maybe Fabrizio, I would like to get your more provider perspective on that. What does it mean for a company like Amadeus to be by the airline side? Is there any sort of specific program or feature you are offering to airlines to achieve that transformation? Look, as any initiative where the target is not clearly defined, this is the scenario we are today, it is an absolute must to have the customer part of the journey. So we follow an agile methodology. The path forward is not fully shaped. So we give a full autonomy to the teams that are empowered to adjust the way forward, depending on the return of each iteration.  And this works quite well and makes, let's say, the dynamics of the teams very engaging. And so far, it looks to be the approach, the correct approach to follow. So what I get is that it's multi-year program, so it will take time to materialize. But is there any benefit or improvement  for the traveler that we can already see or experience as a Finnair traveler, or is it a bit too early at this stage? I can start here and you can complement as needed. Maybe one example on how, let's say, how the flexibility on Nevio can translate into better service to the travelers and actually better selling, if I may say this way. From a Finnair is about one delivery that will come soon,  about the definition of a new, the delivery of a new product catalog, which is basically we are redefining the inventory as it's known today. We will have a product catalog, which is the central point where Finnair will be able to administrate all their products and partners' products. And as part of this delivery, we are going to deliver what we call product bundles. Product bundles are simply a set of individual products and services that are sold as a single entity. So there is a single commercial agreement. And conceptually, they are similar to families today. So many people know what I'm referring to. So what is new with Nevio and product bundles is the design behind the solution that will allow much more flexibility at managing those bundles. I give an example. Finnair will be able to define a product bundle, which is a combination of a flight,  of course, perhaps a seat, so a seat assignment, and say Wi-Fi on board. Okay. If for any reasons, say for operational reasons, that is an aircraft change and the Wi-Fi cannot be delivered to the traveler, with Nevio, we will be able to trace each individual service, part of the bundle, and automatically initiate all the measures to recover in case, as in this example, the service was not delivered to the traveler. This is typically something that cannot be done today with fair families and the PSS. So I take this example as a simple use case simply to extend it to the many use cases that Finnair will leverage with Nevio. And the sum of all those use cases will  obviously translate in much better passenger services. That's a great example. And Pia, is it the kind of use cases feature you are hoping to offer to your travelers in the foreseeable future? Yeah, I agree with Fabrizio. It's a very good example. So we need to utilize the data so that we can understand our customer better and build the customized dynamic offers, also those bundled offers that Fabrizio mentioned. So according to their needs and preferences, and it's important that we can offer them in end-to-end flow in all touch points. So that's really important for us. Also, if you think about what are the benefits for the airlines. So for example, we had our early deliverables and we implemented a dynamic pricing  air and we could already see some positive results. So for example, the over 3% revenue increase so that we are able to provide all these what also Fabrizio mentioned. So we have implemented dynamic pricing ancillaries and traveler DNA for the segmentation and personalizations. So it requires several modules or several products to build all this together. And of course, also Fabrizio mentioned, so it's also important in disruption cases that it will work there as well. Maybe I can just put a bit of extra meat on what Pia is sharing with us. There was this statement here where you put the focus on end-to-end. And I think the message I want to pass here is that end-to-end here goes well beyond the Nevio solution. It is about connecting any system that plays a role in the value chain to deliver the traveler. And with Nevio, we are going to deliver native connectors as an example in the Finnair case to the Salesforce applications so that Finnair can leverage the Salesforce services cloud or marketing cloud both for customer campaign,  for customer services and so on. So this goes along the lines of the open and  modular architecture that I was addressing at the start. Now that's great. And what is getting clear for me is that it's a long sequence of identifying your needs with some product use case and see what can be improved and to completely change those business processes. So my question for you, Fabrizio, is like, there are always like new trends happening on the market and coming in. And sometimes it's a bit hard to understand when you need to move. So why do you think it's the right moment for airlines to start thinking about their traveler-centric approach? Why they should start to care about this now and start to build those foundations you were mentioning?  Look, I think we are already late, okay? Because when we compare the airline industry to the rest of the retail industry, we are trying to catch up. Okay. So we have been into a legacy world for several decades. It's super good to see that the move now is happening and we have customers like Finnair and a few more that are taking the steps to go. To me, Pia mentioned about the early movers advantages. So if the airlines are in this state of mind, they need to go now, okay? Nevio will give the ability to differentiate in a very highly competitive market. So being the first brings the value of the early movers. Okay. But it does not mean that who doesn't do the step now should wait. And I say this because to fully exploit Navio, there is a number of, let's say, preconditions, number of steps that need to take place before the mover. A clear example here is the definition of a clear distribution strategy and the start of the deployment of NDC. Okay. So that's a bit of the story. The airlines are looking for value. They go now. The ones are not ready. They should start preparing. And I close my message with saying that it doesn't necessarily need to be a full go for the full Nevio solution. There are ways to take a subset of the technology, reduce, let's say, the perimeter of the engagement and extract value from that subset. That's interesting. Your comment of your feeling of the industry being already a little bit late in terms of retailing experience we are offering. Pia, do you agree with that? Do you agree that we need to take action and to move to that new airlines retailing experience right now? I fully agree with Fabrizio. So we have been waiting for this change quite a long time. And as I mentioned, so there are so many restrictions in PNRs,  in e-tickets, EMDs and so on. And we don't have them in the future anymore. So it's really, really important. And this will be a massive transformation in airline industry. And it's good to remember that it's not only IT transformation. It's also a big business transformation to simplify the business processes, what you are currently having. So I encourage also other airlines to join this transformation journey and let's make history together. And Fabrizio was mentioning some advantage of being an early adopter of moving first. Pia, what do you think those advantages are from you as an airline too? And again, it's maybe a good way to circle back to our initial point of PNR being a very innovative airline. Why do you feel there was a need for you to move ahead and to move first? We always want to be the pilot because we also want to tell our requirements for what we want. And in this transformation journey, so I would say that the really key is this customer centricity so that we can provide dynamic personalized offers. What we haven't done, we couldn't done earlier. And also, for example, not now when customer is buying ancillaries, maybe we are not able to offer that in the disruption cases. So these kind of things, we need to understand customers better also utilize the data, as I mentioned earlier. So that's really important. Customer is number one, customer first. That's a great way to end up our discussion. Thank you so much both for that very insightful discussions today. I think what I would keep in mind is first that this sort of holistic transformation, you were both mentioning that it's not only to change one product or one solution, it's really to start thinking with the traveler centricity first in mind and that it requires this massive technological overall across the board. But secondly, despite being that massive change, it can be done gradually at a depending of every airline's requirement and state of maturity. And finally, what I understood from you Pia is that Finnair is already quite advanced into that journey. Then we can already see the use cases you are working on and the sort of benefit you will be able to offer to your traveler. So hopefully we can  see that materialized in the coming months. Definitely yes. Pia, Fabrizio, thank you so much for being with us today. It was very inspiring, a pleasure to talk with you. At the end of today's episode, this podcast is brought to you by Amadeus. To stay up to date on the latest news from Amadeus and to catch up on the next episode of our series, check out our insight sections on our website and you can follow us on Spotify or Apple Podcasts. Thank you again for listening and see you soon. Thank you. Thank you.[Music]